Second Mortgage Lending

Using your home to borrow money is a major advantage of home ownership. Until just a few years ago, however, lenders put tight limits on the amount and circumstances under which you could borrow such funds. In fact, taking out a second mortgage on the house carried some stigma with it, a signal that you were in financial trouble. No more. These days, getting a second mortgage or home equity loan is much easier and there is a good selection of loans available. Rates have become more competitive--in some cases well below the prime lending rate, the traditional benchmark for second-mortgage rates. You can even turn the equity in your home into a line of credit, so you can borrow against it whenever you need to. Remember, though, that your house is the collateral for such loans. It's important to choose the best program for your budget--and your long-term financial health.

The Second Time Around
A second mortgage is any loan made in addition to a first mortgage, and is based on the amount of equity you have accumulated (that is, the difference between what you owe on the house and its current market value). Most people take out second mortgages to pay for home improvement projects, cover their children's college tuition, or for emergency purposes (including debt consolidation). If you've accumulated sufficient equity, another alternative is to refinance your house and borrow more than your current loan balance. When interest rates are low, refinancing may make more sense because you usually pay a higher rate on second mortgages than on first loans. Underwriting guidelines are looser for second mortgages, however, so it usually takes less time and effort to get a second mortgage than to refinance a loan. A second mortgage may also have lower transaction costs, so even with a higher interest rate, some second mortgages may cost less in the long run than refinancing.

Choosing a Second
If you decide to get a second mortgage, you have three options: a traditional second mortgage, a home equity loan or a home equity line of credit. Interest is deductible in all three cases, with some limits. With a second or home equity loan, you borrow a fixed sum to be paid back monthly over a set period of time. The amount you borrow is combined with your existing first mortgage, so it's usually limited to 75 to 80 percent of your home's appraised value. A home equity line of credit sets a maximum loan amount for the sum of the first and second loans, typically 75 to 85 percent of the appraised value of the home. You can draw upon this equity line at any time, and repay the loan without making regular payments, during a set period of time (usually five years). Consider all your options before you decide.

Benefits of Second Mortgage Lending

• No Equity required
• Don't need to touch your existing Low Rate 1st Mortgage
• Tax Deductible
• Consolidating Debts will Lower your Monthly Payments

Program Highlights

• 125% Second Mortgage
• 1st Time Homebuyers OK
• Poor Credit OK
• No Verification Income Loans
• Self Employed Borrowers OK
• Interest Only Loan Options
• Home Equity Lines of Credit

How to find the best Second Mortgage Lending Loan

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